CIKLIN, J.
MYD Marine Distributor, Inc. and two affiliated companies
MYD, as a distributor of marine paint and related products, purchases the paint and other goods it distributes from manufacturers and resells them to yacht builders, boatyards, and other customers who use marine paint in their businesses. Until it was terminated in November 2008, MYD was a distributor of Awlgrip topside yacht paint.
In December 2008, MYD filed suit against International Paint and two competing Awlgrip distributors—Donovan Marine, Inc. ("Donovan") and East Coast Marine Distributors, Inc. d/b/a Gold Coast Marine Distributor ("Gold Coast"). In its complaint, MYD asserted claims under the state antitrust laws of Florida, California, and Maryland respectively. After its initial complaint was dismissed for failure to state a cause of action, MYD filed an amended complaint. The defendants again moved to dismiss.
In its amended complaint, MYD alleged that it was the largest distributor of Awlgrip paint in North America and that it consistently sold "its products at significantly lower prices than the prices charged by its competitors." MYD then claimed that several competing distributors of Awlgrip paint (including Donovan and Gold Coast) conspired with one another and with International Paint to "eliminate the
MYD next described specific instances where the "unlawful conspiracy" had been "either acknowledged or carried out by members of the conspiracy in the presence of witnesses." The paragraph of the amended complaint which is relevant to the defendant distributors in this case read in pertinent part:
MYD also alleged that representatives from International Paint had admitted on multiple occasions that it was "under intense pressure from MYD's competitors either to get MYD to raise its prices on Awlgrip products or to terminate MYD as an Awlgrip distributor." These factual allegations included the names of the people who made the comments, those who heard them, and in many instances the dates on which they occurred.
The amended complaint also described a series of actions allegedly taken by International Paint to coerce MYD into raising its prices including: 1) requesting on several occasions that MYD raise its prices to levels charged by other distributors; 2) threatening to delay shipments of orders to MYD; 3) spreading false rumors that MYD was in serious financial difficulty; and 4) shipping defective product to MYD and then falsely telling MYD's customers who bought the defective product that it had informed MYD of the problem, but MYD resold the paint regardless. Ultimately, according to the amended complaint, when these coercive efforts failed, International Paint terminated MYD as an Awlgrip distributor. MYD also alleged statements made by International Paint representatives admitting that MYD's discount pricing was the reason for its termination.
After hearing arguments on the motions, the trial court granted the motions to dismiss MYD's amended complaint. When MYD subsequently advised the trial court that it did not intend to further amend its antitrust claims, the trial court entered a final judgment in favor of International Paint, Donovan, and Gold Coast. This appeal followed.
A dismissal for failure to state a cause of action is reviewed de novo. Wells v. Wells, 24 So.3d 579, 582 (Fla. 4th DCA
MYD sued International Paint, Donovan, and Gold Coast for violations of the Florida Antitrust Act of 1980.
In a distributor-termination case, there must be concerted action ("contract, combination, or conspiracy") between the manufacturer and other distributors to establish an antitrust violation. See Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984) (discussing requirements for the comparable § 1 of the Sherman Act).
In Monsanto, the United States Supreme Court explained:
Id. (citation omitted). Thus, "[a] manufacturer's mere receipt of complaints from its wholesalers or agents who compete with the plaintiff, standing alone, does not constitute a conspiracy." Parts Depot, 669 So.2d at 324. There must also be "some other evidence of a tacit understanding or agreement." Id. at 325.
Although Monsanto and Parts Depot involved the legal standard for analyzing what constitutes a reasonable inference when considering a motion for a directed verdict, the same standard is applicable in evaluating the sufficiency of an antitrust claim where, as may often be the case in distributor-termination cases, the plaintiff's conclusion of concerted action is based on inferences from the alleged facts. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ("In identifying facts that are suggestive enough to render a § 1 conspiracy
In this case, however, MYD has pled much more than just mere complaints followed by termination. MYD alleged an exact place where the conspiracy was formed and the actual representatives from each of the defendants who participated in the agreement. It pled that representatives from Donovan and Gold Coast arranged to meet jointly with a representative from International Paint at a Fort Lauderdale boat show. According to the amended complaint, the representatives "jointly asked" International Paint to force MYD to raise its prices and to terminate MYD as an Awlgrip distributor if MYD refused. MYD also alleged that International Paint agreed to do so, and that immediately after the meeting with the competing distributors, International Paint's representative asked MYD's principal to raise MYD's profit margins to at least 25%. The allegation that International Paint requested that MYD raise its prices immediately after the joint meeting with the competing distributors places International Paint's demand "in a context that raises a suggestion of a preceding agreement." See Twombly, 550 U.S. at 557, 127 S.Ct. 1955.
Even if the above facts were insufficient, MYD also alleged an additional fact which when viewed in the light most favorable to it, further supports the allegation that an agreement was reached. MYD alleged that its owner responded to International Paint's request that MYD raise its prices by telling International Paint's representative that the request was against U.S. law. The representative's alleged response was, "Well, I'm not an American, am I?" A reasonable inference from International Paint's response is that International Paint admitted that its conduct was in violation of U.S. antitrust law. Independent action by International Paint, however, would not be illegal. Thus, the response could be reasonably interpreted as an admission that International Paint's request that MYD raise its prices was made pursuant to the alleged agreement with Donovan and Gold Coast.
A horizontal agreement exists where distributors conspire to induce a manufacturer to refuse to deal with a particular distributor. Parts Depot, 669 So.2d at 324. "Price-fixing agreements between two or more competitors, otherwise known as horizontal price-fixing agreements, fall into the category of arrangements that are per se unlawful." Texaco Inc. v. Dagher, 547 U.S. 1, 5, 126 S.Ct. 1276, 164 L.Ed.2d 1 (2006); see also United States v. General Motors Corp., 384 U.S. 127, 145, 86 S.Ct. 1321, 16 L.Ed.2d 415 (1966) ("Elimination, by joint collaborative action, of discounters from access to the market is a per se violation of the [Sherman] Act.").
Here, the factual allegations in MYD's amended complaint suggest that Donovan and Gold Coast conspired to induce International Paint to refuse to deal with MYD. MYD further alleged that this concerted action by Donovan and Gold Coast was done to protect themselves from price competition by MYD. Thus, the alleged conduct was a per se violation of the Florida Antitrust Act. See Texaco Inc., 547 U.S. at 5, 126 S.Ct. 1276; General Motors, 384 U.S. at 145, 86 S.Ct. 1321. As such, MYD was not required to plead any additional facts to show that the alleged agreement between Donovan and Gold Coast would have anticompetitive effects.
MYD also claims that its allegation that International Paint agreed to the demands of Donovan and Gold Coast made it a participant in the horizontal conspiracy, and as such International Paint's conduct was also per se unlawful. We disagree.
In Leegin, the United States Supreme Court explained:
The rule of reason "requires the plaintiff to prove that a restrictive practice constitutes an unreasonable restraint on competition." Parts Depot, 669 So.2d at 325. Under Florida law, "[t]hree elements must be alleged ... under the rule of reason test: 1) that there is a specifically defined market; 2) that the defendants possessed the ability to affect price or output; and 3) that plaintiff's exclusion from the market did affect or was intended to affect the price or supply of goods in that market." Id. at 326.
MYD alleged the three required elements in its amended complaint. According to the amended complaint, the relevant product market was topside yacht paint, which was defined as "paint and other related coatings used to paint pleasure boats above the water line." MYD further alleged that "[t]opside yacht paint is not reasonably interchangeable with other types of marine paint, such as paint used on commercial vessels (e.g., tugboats and barges) or bottom paint (also known as anti-fouling paint) used on pleasure boats." The amended complaint also stated that the relevant geographic markets depended on the size of the customers. For large customers such as yacht manufacturers, the relevant geographic market was the entire United States. For smaller accounts, the relevant geographic market was regional with the relevant regional markets relevant to this case being South Florida, the mid-Atlantic, Southern California, Northern California, and the Pacific Northwest. Thus, MYD alleged "enough information in [its] complaint to [reasonably] suggest the contours of the relevant geographic and product markets." See Jacobs v. Tempur-Pedic Int'l, Inc., 626 F.3d 1327, 1336 (11th Cir.2010).
MYD also alleged that International Paint possessed the ability to affect price or output in this specifically defined market. According to the amended complaint, International Paint had "market power— the ability to raise prices above competitive levels without losing sufficient sales to make the price increase unprofitable—in each of the relevant markets." MYD supported its contention with the following factual allegations: (1) Awlgrip paint has a market share above 80% in the topside yacht paint market; and (2) International Paint "earns supracompetitive margins on Awlgrip paint."
To show that MYD's exclusion from the relevant market did affect or was intended to affect the price or supply of goods in that market, MYD alleged that it was the largest distributor of Awlgrip paint in North America and that it consistently sold its products "at significantly lower prices than the prices charged by [its] competitors." Thus, MYD's termination as an Awlgrip distributor resulted in the removal of a significant discounter from the market. MYD also alleged that Awlgrip had a sufficiently dominant position that customers continued to buy Awlgrip at higher prices after MYD was terminated rather than substituting other brands of topside yacht paint.
Thus, MYD's amended complaint contains sufficient factual allegations to properly plead that the vertical agreement between International Paint and the competing distributors was an unreasonable
The other two points on appeal raised by MYD have been carefully considered and found to be either without merit or not yet ripe for appellate review. Because MYD's amended complaint contains sufficient factual allegations to properly plead antitrust claims, we reverse the trial court's orders granting the motions to dismiss the amended complaint against International Paint, Donovan, and Gold Coast.
Reversed and remanded for further proceedings consistent with this opinion.
MAY, C.J., and STEVENSON, J., concur.
While we are not bound by the United States Supreme Court's interpretation of the Federal Rules of Civil Procedure, we have been instructed by our legislature to give "due consideration and great weight ... to the interpretations of the federal courts" in interpreting Florida's antitrust statutes. See § 542.32, Fla. Stat. Furthermore, we note that we have looked to federal cases in the past to guide us in analyzing the sufficiency of Florida antitrust complaints. See, e.g., Okeelanta Power Ltd. P'ship v. Fla. Power & Light Co., 766 So.2d 264, 267 (Fla. 4th DCA 2000). As such, we believe that Florida courts should look to Twombly in determining whether an agreement in violation of the Florida Antitrust law can be reasonably inferred from the alleged facts.
669 So.2d at 324 (citation omitted).